Small business owners need a lot of support to succeed, whether it's financial, operational or emotional. One of the most important sources of that support for many entrepreneurs is their network of friends and family members.
Bank of America's Small Business Owner Report, based on a semiannual survey of 1,000 small business owners across the country, found that more than half (53 percent) of the respondents rely on family to serve important business roles, like advisers, employees, investors and partners. Additionally, 38 percent of the entrepreneurs surveyed have received a financial gift or loan from family and/or friends at some point to fund their business, and 35 percent said that friends and family help them the most with running their business.
"We know small business owners are inherent self-starters making significant personal sacrifices on behalf of their businesses, but what's fascinating is this dimension of family, friends and community that they see as core to their success," Sharon Miller, head of small business at Bank of America, said in a statement.
According to the report, here's how small business owners view the support they receive from their personal connections.
Most small business owners who borrow from family or friends feel grateful. Sixty-six percent of entrepreneurs who used funding from family and/or friends to help with their business said that they feel grateful for that support or appreciate it. Respondents reported other emotions related to borrowing from friends and family, including anxiety or pressure to pay it back (30 percent), happy or optimistic (27 percent), and awkward or embarrassed (23 percent).
"We didn't see signs of reluctance or payback guilt among the 38 percent of small business owners who said they've received financial support from family or friends for their business. In fact, very few actually said they felt awkward or embarrassed about it," Miller said. Of those surveyed, a vast majority had no regret about asking their loved ones to invest in their business. Miller added, "Perhaps that's because nearly three-quarters intend to pay it back."
Owners of newer small businesses – those whose businesses are less than five years old – are not only more optimistic than their more established peers, but they are also more likely to receive financial support from family and friends (34 percent, compared to only 18 percent of both growing and well-established businesses).
Small business owners rely on family for support beyond financing. Emotional support can be just as important to a small business owner as financial support. The stresses that come along with building and growing a business can't always be solved with money. Fifty-seven percent of respondents said that they rely on family and friends for emotional support. Volunteering and providing business referrals are other nonfinancial ways that friends and family can support a small business owner.
"Beyond investments in the business, 13 percent of small business owners say their family or spouse financially supports them with personal expenses such as buying groceries or clothing," Miller said.
Small business owners and local communities rely on each other. According to the survey, nearly two-thirds of small business owners report that residents in their community actively support small business, with nearly 50 percent saying their local community plays an important role in the success of their individual enterprise. To show their appreciation, 67 percent of small business owners surveyed reported that they support charitable or nonprofit organizations in their community.
"A strong tie to the community and the support of local business is important to many small business owners," Miller said.